Global stocks near 15-month high; China data weighs on the markets

LONDON (Reuters) – Global stocks settled near 15-month highs and the dollar held near a one-year low on Tuesday as investors paused to assess weak economic data from China and wait for U.S. retail sales. Data and earnings.

Asian stocks fell earlier in the session as markets gripped growth data from Monday showing that China’s post-pandemic economic recovery is over.

Deutsche Bank said it cut its forecast for economic growth in China this year, following similar moves on Monday by JPMorgan, Morgan Stanley and Citigroup.

At 0806 GMT, the MSCI World Equity Index was little changed at 697.27, close to 698.39 reached on Friday, the highest level since April 2022 (.MIWD00000PUS).

European stocks made slight gains, with London’s STOXX 600 and FTSE 100 both up 0.2% (.STOXX), (.FTSE), while Germany’s DAX rose just 0.1% (.GDAXI).

“China is very important for Europe,” said Fiona Cincotta, senior market analyst at City Index. “There are a lot of concerns about what weakness in China could mean for Germany and the German economy and I think we’re seeing that played out in the DAX, which is struggling to move higher.”

Investors were awaiting US retail sales and industrial production figures later in the session, which could give clues about the Fed’s policy outlook.

The Federal Reserve, European Central Bank and Bank of Japan hold their policy meetings next week.

“Any sense that the Fed has peaked interest rates or any sense that it has become less hawkish or more dovish will be the injection that stocks need for the next rally,” Cincotta said.

Expectations that the Federal Reserve and the European Central Bank will disagree on raising interest rates has caused dollar weakness recently.

Money markets priced in a 25 basis point rate hike from the Fed at its policy meeting later this month, although there were expectations that interest rates would come down as early as December.

Conversely, investors expect the European Central Bank and the Bank of England to extend the rate hike cycle.

The US dollar index fell 0.1% to 99.792, after reaching its lowest level since April 2022 on Friday.

The euro hit a new 17-month high of $1.1276 at about 0732 GMT, before retreating, rising 0.1 percent on the day at $1.1237.

Eurozone government bond yields slumped, with the 10-year German bund yield hitting its lowest since July 3 at 2.368%, down nearly 8 basis points on the day.

The benchmark 10-year note is down about 4 basis points on the day, with a yield of 3.7579%.

Investors are also watching quarterly results this week, as major banks such as Bank of America (BAC.N), Morgan Stanley (MS.N), and Goldman Sachs (GS.N) post profits.

Tesla (TSLA.O) reports later this week, which will allow the market to take a closer look at how big US companies are doing, after the recent stock rally.

Oil prices changed little, with Brent crude settling at $78.43 a barrel and US West Texas Intermediate crude at $74.27, up 0.16%.

Spot gold rose 0.33% to $1961.1 an ounce.

(Reporting by Elizabeth Howcroft). Additional reporting by Selina Lee in Hong Kong

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